General Dynamics Land Systems, Inc.

Material Facts

• GDC and the government entered into a 10 June 2003 advance agreement concerning the CAS 403 allocation formula.
• The 2003 advance agreement stated that end-of-period net book value of assets included end-of-period contracts in process, less advances and payments, inventory, and net property, plant and equipment, while deferred costs were excluded from contracts in process.
• GDC's contracts-in-process account contained accumulated costs of partially completed items under a government contract, including labor, material, overhead, and general and administrative expenses.
• DCAA concluded that GDC improperly included unbilled receivables as inventory in its computation of the CAS 403 three-factor formula.
• DCAA stated that unbilled receivables were neither tangible capital assets nor inventories and that including them in both the revenue factor and the asset factor effectively double-counted them.
• DCMA issued a final decision determining that GDC was not in compliance with CAS 403-50(c)(1) because it improperly included unbilled receivables as inventory in the asset factor.
• The final decision identified Contract No. DAAMO 1-96-C-0028, held by GDLS, as a representative contract.
• GDLS argued that the 2003 advance agreement expressly permitted contracts in process to be included in the third factor.

Parties

Appellant

General Dynamics Land Systems, Inc.

Respondent Agency

Defense Contract Management Agency

Contract Number

DAAMO 1-96-C-0028